PM wants to reduce department’s stranglehold on public purse and bring long-term thinking to economic policy
Andy Burnham is far from the first prime minister to dream of taming the power of the mighty Treasury.
Boris Johnson all but forced the resignation of Sajid Javid by handpicking his team; Margaret Thatcher favoured her economic adviser Alan Walters over Nigel Lawson, prompting the latter’s furious resignation; and Tony Blair and Gordon Brown’s power struggle was the stuff of Whitehall legend.
Burnham’s approach harks further back still to Labour prime minister Harold Wilson’s Department for Economic Affairs (DEA), a short-lived attempt to bring long-term thinking to British economic policymaking.
The PM made the historical analogy as he gave fresh details this week of his plan to take control of growth policy from the Treasury and hand it to a new No 10 department in Manchester.
The DEA was responsible for drawing up a national plan for the economy, which began with the timeless exhortation: “We must pay our way in the world and produce more wealth inside this country.”
The baleful influence of the Treasury, with its stranglehold over the public finances, has long been lamented by leftwingers, who accuse it of short-term thinking and ingrained, institutional caution.
“The dual job of growth and control of the public finances sometimes clouds the growth mission,” Burnham told the Times. “Having No 10 leading on that growth mission means you’ve got maximum power to unlock the blockages where they exist in the Whitehall system.”
Some of the most criticised decisions of Keir Starmer’s tenure were seen by many Labour MPs as resulting from this “Treasury brain” – from slashing winter fuel allowance to caving in to City lobbying on a bank windfall tax.
Burnham hopes the new prime minister’s department, overseen by his powerful cabinet ally Louise Haigh, will open the space for some fresh thinking. “The new No 10 North innovation is more significant than people realise,” he said.
One of the few detailed policy publications the new cabinet has so far produced was on radical plans for devolution. The PM hopes handing additional powers to metro mayors will help bring together growth policies now scattered across Whitehall.
Ruth Curtice, director of the Resolution Foundation thinktank and a former longtime Treasury official, says coordinating across these different policy areas – housing, education, planning and so on – could be the most effective use of the new Manchester-based unit.
“No one department has all of the levers – the Treasury don’t own all of the levers,” she says. “I would see it as a positive thing that this No 10 says, ‘Given what a priority this is, we’re going to put more force behind it.’”
Former Brown adviser Michael Jacobs, emeritus professor of political economy at the University of Sheffield, draws a comparison with the Office for Climate Change, which helped to coordinate policy across government.
“The really interesting version of this to me would be a new growth unit, drawing on and made up of officials from all the relevant departments.”
